Globalization and the Downsizing of the American Dream

Globalization and the Downsizing of the American Dream

by Kevin Danaher

Just about every day we hear something about globalization. The mass media give us the impression that the impersonal forces of the "free market" are knitting together the peoples of the world into a seamless quilt. We are led to believe that things will steadily get better if we can just keep governments from meddling with the market forces that lead to more growth and efficiency.

Yet we also know that jobs are being lost to global competition. We know that the global environment is being threatened on a number of fronts, from global warming and the deterioration of the ozone layer to the extermination of species and the poisoning of the world's water supply. We see refugees and immigrants by the millions roaming the planet, in search of jobs and protection from armed conflict. We also know that inequality is getting worse: fewer and fewer large corporations own more of the world's productive resources while millions of people are unable to sustain their families. Many of us have a gut feeling that the global economy has gone awry. We would do well to trust our feelings. This booklet addresses this crucial issue: how the globalization of the economy undermines the quality of life in the United States. The decline in our standard of living can be seen in numerous areas:

1. As U.S. corporations have expanded their global reach they are better able to put the U.S. workforce in direct competition with foreign workers, thus increasing their profits while driving down our wages and general standard of living.

2. Global corporations are better able to use technology to downsize their workforces, thus creating anxiety among working people who no longer feel secure about the future of their jobs.

3. As global corporations become less dependent on any particular nation, they have less interest in supporting any government with taxes. This results in a shrinking tax base and what is referred to as a "fiscal crisis of the state" (the tendency for government expenses to outrace revenues).

4. By using the rationale of "global competition" to drive down the living standards of the majority, the corporate class has shifted more and more wealth from our pockets to theirs. This growing inequality is producing resentment and rebellion-here and abroad.

Yet all is not gloom and doom. The globalization of finance, production and trade is being followed by the globalization of grassroots democracy. Individuals and grassroots groups are gradually building an alternative society guided by social justice and environmental sustainability rather than by greed. We conclude with ways for you to get involved in this movement to construct alternatives to top-down globalization.

Do We Want Just a Market, or a Just Market?

When the U.S. came out of World War II as the dominant industrial country, it was logical that the dollar would become the global currency, that U.S.-based corporations would dominate world markets, and that the U.S. would have the strongest hand in shaping global institutions such as the World Bank and the International Monetary Fund. This dominance allowed U.S. transnational corporations to expand to gigantic proportions. Many of the Fortune 500 companies now have annual revenues larger than the gross national product of most Third World countries, and even larger than the GNP of industrial countries such as Finland, Denmark and Norway.

The global reach of large corporations has disconnected them from national needs and desires. Business Week points out that "As cross-border trade and investment flows reach new heights, big global companies are effectively making decisions with little regard to national boundaries. Though few companies are totally untethered from their home countries, the trend toward a form of 'stateless' corporation is unmistakable.

As corporations have developed their ability to tap into a huge global labor pool, they have less need for the social welfare policies of any particular nation. Global companies may want various kinds of subsidies from the government, but when it comes to government regulations that could allow the people to exert control over big business, corporate ideology preaches "free trade," deregulation and the downsizing of government. The possibility of a truly democratic government is the most serious threat to the power of large corporations-so government must be dismantled!

With a global labor pool at their disposal, transnational corporations are less dependent on any particular national workforce. The facts show that in recent decades U.S. corporations have been cutting jobs here while expanding employment abroad. And the percentage of their total profits that derive from overseas operations has been rising sharply.

The old dictum, "What's good for General Motors is good for America" has a hollow ring in an age of globalization and corporate downsizing. After laying off more than 70,000 workers since 1993, General Motors now ranks as the wealthiest U.S. corporation, raking in more than $168 billion in revenues in 1995 alone-that's equal to the annual wages of more than 19 million Americans earning the minimum wage.

The increasing globalization of U.S. corporations gives them the leverage to hold down wages and resist unionization. Average real wages (corrected for inflation) have been falling since the early 1970s. By 1992, average weekly earnings in the private, non-agricultural part of the U.S. economy were 19 percent below their peak in the early 1970s. Nearly one-fourth of the U.S. workforce now earns less in real terms than the 1968 minimum wage! The trend toward less unionization is evident in the third graph below, which shows a steady decline in union membership since the 1950s. This is a chicken-and-egg relationship because weaker unions are less able to restrict corporate behavior and the resulting freedom of action for global corporations means unions will be weakened further by companies putting their workers here in competition with low-paid workers abroad.

Working People Feel Insecure

The restructuring of our political and economic life due to globalization may be as significant a process as the industrial revolution. In early 1996 the mainstream media- incited by the rhetoric of Republican presidential candidate Pat Buchanan-focused an unusual amount of attention on the plight of U.S. workers in a globalizing economy. As the New York Times editorialized on February 25, 1996: "voters are clearly unnerved by corporate restructurings and the search for cheaper labor overseas." The Times went on to point